Puerto Rico has an unusual history with business development.
Many of the major efforts have been based on tax incentives — including tax incentives that cost the federal government so much that they could have saved money by simply paying the workers and bypassing the companies that received the tax breaks.
Tax breaks for business are a normal part of doing business in the United States, and all states offer them. But Puerto Rico Secretary of Economic Development and Commerce Manuel Laboy Rivera pointed out that “No economy can continue moving forward only through incentives.”
Tax breaks also need to be affordable for the territory and the nation, and they need to lead to jobs and expenditures in Puerto Rico. The incentives Puerto Rico has offered in recent years have been designed to encourage wealthy people to move to Puerto Rico, at least part time. They have not improved the Island’s economic position.
Governor Rossello’s tax incentives have a different focus – a local one. He has signed amendments to laws that will empower small businesses, start ups, and independent professionals to take advantage of these laws to build local businesses, rather than wooing multinational corporations that use the tax breaks to shelter profits. The industries affected by these changes include new and growing verticals like information technology and medical tourism, where Puerto Rico is a position to shine.
Resident Commissioner Jenniffer Gonzalez introduced a bill called the “Puerto Rico Task Force Economic Empowerment Act of 2017,” which would support small business in Puerto Rico with SBA loans, contracting preferences, and health care options. This bill, HR 2429, is under consideration in several House committees.
Start up incubators are also playing a part, especially in the tech and information industries, where Puerto Rico has some particular strengths. Parallel 18 (which will be accepting applications beginning on September 12th) and Startup.pr are examples. This kind of program has made a difference for entrepreneurs all across the United States, and is showing results in Puerto Rico already.
Groups like Startups of Puerto Rico support Puerto Rico’s growing entrepreneurial ecosystem with volunteer mentors and collaboration. These organizations reflect a new attitude toward business in Puerto Rico. “We were taught to be employees here — not entrepreneurs,” event coordinator Carlos Cobián, was quoted as saying in the New York Times. Cobian encourages members of Puerto Rico’s diaspora to invest in Puerto Rico and supports fellow entrepreneurs on the Island.
New companies like Brands of Puerto Rico and AbartysHealth are taking advantage of new technologies and business models that help level the playing field for smaller companies. But new approaches to traditional industries are also arising. In 2015, Puerto Rico imported 85% of its food. Now, small local farms produce crops for new local restaurants and a general upsurge in agriculture has begun to improve access to local foods. Puerto Rico now imports 80% of its food — a 5% improvement.
Agriculture currently accounts for just over 2% of Puerto Rico’s economy, but the changes in this industry show the new entrepreneurial spirit in Puerto Rico. The 21st century workplace is not one in which people have to wait for someone else to hire them, and Puerto Rico is beginning to join this new economy. Supportive policies and individual efforts can combine to foster business development that benefits Puerto Rico.
